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Capital versus the Climate

21 June 2017

Capital versus the Climate

Every attempt to combat climate change runs up against a veto from capitalist interests. This requires us to imagine a better tomorrow, a future in which we fight for a world in which humanity and the environment, not capital accumulation, stand at the centre.

By Eduard van Scheltinga

Capitalism and the exploitation of the environment

CO2 pollution is the principal cause of climate change. “Of all the greenhouse gases emitted by humanity, the increase in the proportion of CO2 in the atmosphere makes the biggest contribution” wrote the Dutch national Environmental Planning Bureau and the Royal National Meteorological Institute in a recent joint publication on the issue. It’s true that during the last twenty-five years countries have held negotiations on the reduction of CO2 emissions, but without success, with emissions rising 57% since 1992. So we need to focus not so much on the greenhouse gases, but principally on the economic system which causes their emission.

CO2 pollution might be compared to the exploitation of labour in the capitalist method of production described by Karl Marx in Capital. By exploitation of labour he meant that workers were paid less than their labour power was worth, enabling the growth of capital.

Just as capitalism brings with it a situation in which workers who don’t provide sufficient profit for a firm will be shown the door, so substances whose use is unprofitable will be dumped. It’s not so long ago that factories were releasing so many poisonous substances into the water that in many places people could no longer go swimming. From 1970 onwards, thanks to growing social resistance to dumping, stricter environmental laws were introduced which meant that in a number of towns’ canals you could once again swim. Nevertheless we can continue to speak of the exploitation of our environment through the dumping of unprofitable matter. Chemours, formerly DuPont, has been poisoning workers and people living in the vicinity of their plant through the release of the poisonous substances C8 and, more recently, GenX. And this in full knowledge of the firm’s top management, according to an investigation by the daily newspaper Algemeen Dagblad.

The same goes for CO2. Carbon dioxide contributes nothing to corporate profits and for this reason it is dumped on a large scale into the environment, with climate change as a consequence. The climate problem cannot therefore be seen as separate to the economic system that causes it. CO2 pollution on a large scale is permitted and lucrative. That is the core of the problem. It’s a double exploitation of workers: they are underpaid for their labour and their environment is polluted.

The role of industry

Ninety corporations are responsible for two-thirds of global CO2 emissions, according to research conducted by Richard Heede. Shell comes fifth in his league table of polluters. A weekly newspaper, De Groene Amsterdammer conducted research which established that just 132 firms account for a quarter of Dutch CO2 emissions, with Shell as the undisputed number one. It also emerged that the Netherlands emits just as much as it did a decade ago. If we really want to reduce pollution from carbon dioxide, we need to at least halt emissions from the biggest polluters. These corporations, however, have other concerns.

Although workers in the twentieth century had, through organising, built considerable power, since the rise of neoliberalism in the 1980s it is the power of shareholders which has prevailed within listed companies, and profit maximisation has taken centre-stage. In her book This Changes Everything: Capitalism versus the Climate, Naomi Klein shows how you can see this reflected in the practice of a fossil fuel giant. She writes that in 2009 Shell announced that its proven reserves were smaller than what it had in production. This created considerable unrest among the shareholders. The very same day investment in wind- and solar power was stopped, while investments in shale gas, deep sea oil and tar sands were increased. As a result Shell succeeded during that year in upping its known reserves to 3.4 million barrels. And as the firm’s reserves increased, so did the price of its shares.

An oil corporation must have known reserves of it wants to attract capital from shareholders. Major oil and gas producers must therefore continually look for new reserves, because if they don’t do so their share price will drop. Doing so represents an investment in itself, and this creates the need to exploit the discovered oil and gas fields. They have to run to stand still.

You can see this also in fossil energy corporations’ spending. Journalist Jelmer Mommers of De Correspondent investigated Shell’s spending in order to ascertain how much of it went on clean energy. In 2016 the firm spent $200 million on the development of new energy technologies, less than 1% of its total budget of $270 billion. This spending pattern is comparable to that of another fossil giant, ExxonMobil.

According to research by the Carbon Tracker Initiative conducted in 2011, 80% of the CO2 in the ground has to stay there if we are to meet the 2 degree warming target. If the Paris Climate Accord is upheld then in the near future a large proportion of known energy reserves will be rendered valueless. Naomi Klein estimates the value of existing carbon stocks at $27 billion. What’s needed, therefore, as Naomi Klein argues, is precisely what the fossil energy companies cannot contemplate.

Compliance with the Paris agreement would therefore have a massive impact on these fossil energy corporations. Jan Rotmans, writing in De Groene Amsterdammer, predicts an imminent ‘battle field’ in the fossil industry and that Rotterdam’s Botlekgebied, where the industry is concentrated, will become its ‘mausoleum’. The industry’s role in producing CO2 pollution is enormous and the fossil corporations are not going to back off of their own volition. If we want to solve the climate problem, agitation against the power of capital will be needed.

Opium for the people

In various ways the mechanisms of exploitation, including of the environment, are disguised ideologically. One example is ‘ecologism’, which Slavoj Žižek has called ‘the new opium for the people’. He argues that an almost religious belief exists in a by definition good balance of nature, which arrogant and sinful humanity has disturbed with science and technology. Ecologists offer ‘living in harmony with nature’ as the ideal. You have the choice as an individual, which of course you must make, not to pollute. If everyone made that choice, then the world would change of its own accord. Companies play a role in this by promoting their products as being sustainable. All you have to do is buy their products.

But nature is not by definition good and there is no established balance. Nature is in continual movement and can cause catastrophes, such as disease and natural disasters. And an individual, ethical choice the ninety biggest polluters need not change their ways. Ecologism is an ideological distraction from the unequal relations of power between the classes. It ensures that big polluters can do what they like.

Another example is CO2 compensation. You may have seen when booking a journey the option of compensating for the carbon emitted as a result of your trip. According to Naomi Klein, the compensation occurs in many cases not in the form of the planting of new forests, but is achieved by counting existing forests on the other side of the world as ‘compensation forests’. The indigenous people who live there are then driven out and a fence erected around the forest. So in the guise of sustainability land is expropriated and CO2 pollution carries on regardless.

CO2 compensation forms part of the emissions trading system (ETS) supported by, amongst others, capitalism-friendly environmental organisations. The idea is that a market for pollution will lead to a reduction in CO2 emissions. Their powerful lobby has enabled fossil energy corporations to keep control of the system. Between 2005 and 2010 the market for emission rights was estimated by the World Bank at some $500 billion. According to an enquiry conducted by environmental research organisation CE Delft, polluting corporations have earned billions from this European variant of the ETS. Meanwhile, in terms of CO2 pollution, nothing changed.

Marx wrote: “To call on people to give up their illusions about their condition is to call on them to give up a condition that requires illusions.” Climate problems have been left long enough to the illusions of individual, ethical choices and market mechanisms. We have to change the economic causes of pollution.

Obstruction by capital

It’s not just that the fossil industry is carrying on in the same old way; there is also evidence of deliberate obstruction of climate policy. Fossil fuel firms are, for example, securing dominant positions in important interest groups concerned with renewable energy. They then have these organisations say that gas is a less polluting fuel. This was how they influenced the energy goals fixed by the EU for 2030.

States also delay each other’s climate policies. Naomi Klein recounts a story from Canada which is inspiring but at the same time has a depressing end. She describes a declining industry in Ontario, which for a long time had consisted of three major US car firms. In order to breathe new, green life into the province’s industrial sector, an ambitious energy programme was developed. Energy producers would be guaranteed high prices on condition that they used local products and local labour. The programme was a success. As a result of the province’s policies progress was achieved and this brought lots of jobs. In 2012 Ontario was the biggest producer of solar power in Canada and in 2013 it was estimated that the programme had generated 31,000 jobs.

That was until Japan and the European Union lodged complaints at the World Trade Organisation. The WTO ruled against Canada. The demand that local products be used represented discrimination against products made elsewhere and was therefore unlawful. The demand was dropped and investment fell. Factories closed and no new ones opened to replace them.

Whereas under the WTO states can bring complaints against each other, investor rights treaties such as the TTiP and CETA give corporations the power to take states to court directly. The ISDS forms part of these treaties, and this is how it works. Say that we have taken a democratic decision that Shell and ExxonMobil cannot extract any more gas from the Groningen gas field. On the basis of ISDS the corporations affected can demand and receive compensation for lost profits, compensation which will come from the society, making democratic decisions truly expensive.

With this defence of investors’ rights the freedom of capital is guaranteed at the expense of the general interest. These examples show how the role of capital is being strengthened, while trading in a democratic fashion in order to address climate problems is restricted.

Progress through agitation against capital

In the fossil industry CO2 pollution is part and parcel of achieving a good return on capital. At the same time it represents a double exploitation of workers. They receive less in wages than their labour is worth, while their environment is polluted, with climate change as the result. If we want to tackle the climate problem, then we have to question the influence of capital.

For a different economy, different investments are needed. Democratic influence on capital would mean that we could take such decisions. To move towards this, the SP has proposed the establishment of a National Investment Bank. The SP’s demand for a workers’ meeting in major firms, one which would have as much influence as the shareholders’ meeting, would also help to make different kinds of investment possible.

But we could conduct a green industrial policy right now. All we need to do is decide that that’s what we want to do. Making homes sustainable, building solar panels, windmills and batteries. With a green industrial policy we could ensure work and prosperity, without waiting for the fossil industry to disappear. A Dutch worker will be left with nothing if the coal-fired power station where he or she works closes and is replaced with a job in a solar panel factory in China.

Progress need not be so far away. Making it possible for everyone to install solar panels on their roof would mean, for example, immediate lower energy bills. It has been calculated that Dutch roofs have space for a further 145 million solar panels. This could cut domestic energy bills by a total of some €6 billion. By organising tenants – from below - to get housing associations to fit solar panels, we would gain both clean energy and lower energy costs.

In Hamburg it was organising from below which removed capitalism from the energy sector when a referendum forced the local authority to take energy generation into public ownership. Switched On London is organising people to demand a municipal energy corporation. The group is demanding, along with this, clean and cheaper energy in order to put a stop simultaneously to pollution and poverty. Solving the climate problem would lead to progress for our society.

A slightly longer version of this article first appeared in the original Dutch in the SP monthly Spanning, June 2017. Eduard van Scheltinga is a member of the SP’s research bureau.